The UK Retention Deposit Scheme is an independent scheme for the protection of retentions under construction contracts.
We provide segregated bank accounts for construction retentions under standard-form and bespoke construction contracts in England and Wales.
There is no dedicated legislation governing construction retentions in the UK. Instead, their use is permitted under general contract law, regulated only indirectly by the Housing Grants, Construction and Regeneration Act 1996 (commonly referred to as the Construction Act).
The 1996 Act introduced important payment protections for contractors and subcontractors, such as:
However, it did not prohibit or regulate retention itself. It allowed parties to agree to withhold a portion of payment (typically 5%) to secure performance and rectify defects, provided that the contract included clear payment terms and complied with the Act’s adjudication and notice provisions.
Consequently, retentions remain common across both public and private sector projects. The lack of a statutory framework specifically addressing their use, duration, or security has been a key source of criticism - and the focus of legislative proposals in recent years.
In 2017, Peter Aldous MP introduced the Construction (Retention Deposit Schemes) Bill as a Private Member’s Bill in the House of Commons. The Bill sought to mandate that any cash retention withheld under a construction contract must be:
This proposal directly addressed the widespread concern that retention monies - particularly those owed to subcontractors - were vulnerable in the event that the main contractor or employer entered insolvency. The collapse of Carillion in early 2018, which left an estimated £250 million in unpaid retentions, added urgency to the Bill’s passage.
The Aldous Bill received cross-party support and significant industry backing, including from:
However, as a Private Member’s Bill, it faced procedural limitations. Although it had its second reading scheduled in the 2017–2019 Parliamentary session, repeated deferrals and the 2019 General Election caused the Bill to lapse without a vote.
Despite broad support, several factors contributed to the Bill’s failure:
The combined effect was to stall the Bill despite strong external momentum. However, it played a key role in keeping retention reform on the parliamentary and industry agenda.
Yes. The Aldous Bill was not the first or last legislative attempt to address retentions.
In 2015, a cross-industry coalition, led by the SEC Group, proposed a system whereby public sector clients would be required to hold retention money in a retention trust account. The aim was to ensure that funds withheld from main contractors and subcontractors could not be misused or lost in insolvency.
Although not introduced as a formal Bill, this proposal gained some traction with individual contracting authorities. However, in the absence of a national framework or legislation, adoption remained patchy and inconsistent.
In the House of Lords, Lord Aberdare introduced a new Construction (Retentions Abolition) Bill in 2021. This Bill proposed a much more radical step than the Aldous Bill: to prohibit the practice of retention altogether.
Key features included:
While the Bill was welcomed by campaigners seeking to eliminate retentions entirely, it faced substantial resistance from clients and some Tier 1 contractors who viewed retention as a necessary safeguard.
As of 2024, the Bill has not progressed to enactment but remains a reference point in discussions about future reform.
The legislative debate around retentions has been shaped by sustained lobbying from across the construction supply chain.
These groups have consistently argued that reform is essential to prevent payment abuse, protect the supply chain and improve industry resilience.
As a result, proposals for abolition or statutory deposit schemes have faced divided opinion, making it difficult to secure political consensus.
As of May 2025, the UK government has not committed to legislation to reform retentions. However, it has:
In response to Parliamentary Questions in recent sessions, ministers have consistently said that reform remains “under consideration” and that “industry-led progress is preferable to statutory compulsion.”
In practice, however, retentions continue to be used widely across UK construction, including in public projects, and there remains no statutory requirement to ring-fence, secure or release retention monies within a defined timeframe.
The UK Parliament has seen multiple attempts to legislate for retention reform. From the deposit schemes of the Aldous Bill to the outright prohibition proposed by Lord Aberdare, the legislative trajectory reflects growing dissatisfaction with the status quo - but also persistent obstacles to change.
While none of the Bills have become law, they have:
Going forward, successful legislation will likely require:
The parliamentary history shows that reform is possible, but only with political will, cross-sector alignment and a credible legal framework. Until then, retention will remain a legally tolerated - but increasingly contested - feature of UK construction.
We don't lend, invest or leverage your retentions. We simply hold all deposits in full and unencumbered at the Bank of England, always keeping them fully available on demand.
Retentions are safeguarded and protected from the trading activities of any underlying bank, meaning that even if the worst happens to a bank, or there is a run on its funds, or even if anything happens to us, your retentions are 100% secure.